From my analysis:
“AMD is something else that has come up on my screener in the past, but I just couldn’t figure out how to trade it. Looking at it today, price has been pushing down and there was a long base during most of February and March. A couple of weeks ago, price pushed through those lows, somewhat moved sideways, then made a new low last Thursday and between Friday and today has done another retest.
Looking at the hourly/15 min. chart, this is pushing down off of the retest, and at this very moment, appears to be basing again. As a day trade, I’m not seeing much — the R:R appears to be less than 1 on the 15 min. chart. Even the 5 min. chart isn’t offering a ton that excites me. That said, though, if I look at a longer-term play, with a similar entry on the hourly chart with a target from the 4h chart at $83.50, the numbers might look better. And if they do, that just begs the question: Stock play or put option.
With the underlying being in the $80’s, I think a straight stock play is the move. Let’s run the numbers and see what we’re looking at. I’ve got a 1.81 R:R, now, which isn’t bad, but not as much as I’d like. With a stop loss $1.85 above my entry price, my R:R becomes closer to 3; and I still like it because even today, price has moved 1.5% and less than that amount ($1.50 right now). That puts my stop at $90.50 which is above a prior resistance area, but not quite the highs of the retest. I think I’m going to pull the trigger, but only risking 1% rather than 2.”
Entry – $88.65
Stop – $90.50
Target – $83.50
Entry – $88.65
Updating 5/2 – Exit on 4/25 @ $90.50
Looking at the chart today, I liked the retest that had formed and liked the short on the break of the lows. Remembering back, I set an entry order, but price pushed up most of the day and stopped me out near the day’s close. I remember because price gapped down nicely into (would’ve been) profit the next morning. Price pushed up enough to stop me out…. It’s hard to say that it was a bad trade, given what happened after; I’d just say it was mistimed. Not a whole lot I can do about that. I’m glad I was ultimately right and fortunately it was a .5% trade so it was only small loss.
As a stock play, I could’ve made anywhere from .65 – 1R if I hadn’t gotten stopped out, and I’m not sure if I would’ve been able to make that in the option; I guess I’ll have to see if that replay mode works on options to see — I found the replay mode, was able to buy an option and see what it did the next day when it dropped.
First of all, it wasn’t really a choice for me to buy an option because they were all too expensive. That said, if I were to get that option — and not have that direct stop loss set like I did with the stock play — it would’ve been a 1.7R profit… That’s good to know, I guess, something to keep in mind. Still was a situation where I had to do the stock play because of price so it is what it is. Maybe the options should come back in to play when I have more money to trade with. Regardless, it’s a bummer that it was a loss but again, I mostly mistimed it so it’s not that bad. Keep swimming.